645.62(1)(a)4.4. That the sum claimed is justly owing and that there is no setoff, counterclaim or defense to the claim.

645.62(1)(a)5.5. Any right of priority of payment or other specific right asserted by the claimant.

645.62(1)(a)6.6. A copy of any written instrument which is the foundation of the claim.

645.62(1)(a)7.7. In the case of any 3rd-party claim based on a liability policy issued by the insurer, a conditional release of the insured pursuant to s. 645.64 (1).

645.62(1)(a)8.8. The name and address of the claimant and the attorney, if any, who represents the claimant.

645.62(1)(b)(b) No claim need be considered or allowed if it does not contain all the information under par. (a) which may be applicable. The liquidator may require that a prescribed form be used and may require that other information and documents be included.

645.62(2)(2)Supplementary information. At any time the liquidator may request the claimant to present information or evidence supplementary to that required under sub. (1), and may take testimony under oath, require production of affidavits or depositions or otherwise obtain additional information or evidence.

645.62(3)(3)Conclusiveness of judgments. No judgment or order against an insured or the insurer entered after the filing of a successful petition for liquidation and no judgment or order against an insured or the insurer entered at any time by default or by collusion need be considered as evidence of liability or of the amount of damages. No judgment or order against an insured or the insurer entered within 4 months before the filing of the petition need be considered as evidence of liability or of the amount of damages.

645.63(1)(1)Claims contingent on judgments. The claim of a 3rd party which is contingent only on the party's first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency.

645.63(2)(2)Claims under terminated policies. Any claim that would have become absolute if there had been no termination of coverage under s. 645.43, and which was not covered by insurance acquired to replace the terminated coverage, shall be allowed as if the coverage had remained in effect, unless at least 10 days before the insured event occurred either the claimant had actual notice of the termination or notice was mailed to the claimant as prescribed by s. 645.47 (1) or 645.48 (1). If allowed the claim shall share in distributions under s. 645.68 (8).

645.63(3)(3)Other contingent claims. A claim may be allowed even if contingent, if it is filed in accordance with s. 645.61 (2). It may be allowed and may participate in all dividends declared after it is filed, to the extent that it does not prejudice the orderly administration of the liquidation.

645.63(4)(4)Immature claims. Claims that are due except for the passage of time shall be treated as absolute claims are treated, except that where justice requires the court may order them discounted at the legal rate of interest.

645.63(5)(5)Claims under security fund. The board of the insurance security fund shall file a claim with the liquidator for all claims to which the fund has been subrogated under s. 646.33 (1).

645.63(6)(6)Claims under employment contracts with directors and others. Claims made under employment contracts by directors, principal officers or persons in fact performing similar functions or having similar powers are limited to payment for services rendered prior to the issuance of any order of rehabilitation or liquidation under s. 645.32 or 645.42.

645.64(1)(1)Third party's claim. Whenever any 3rd party asserts a cause of action against an insured of an insurer in liquidation, the 3rd party may file a claim with the liquidator. The filing of the claim shall release the insured's liability to the 3rd party on that cause of action in the amount of the applicable policy limit, but the liquidator shall also insert in any form used for the filing of 3rd-party claims appropriate language to constitute such a release. The release shall be void if the insurance coverage is avoided by the liquidator.

645.64(2)(2)Insured's claim. Whether or not the 3rd party files a claim, the insured may file a claim on his or her own behalf in the liquidation. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within 60 days after mailing of the notice required by s. 645.47 (1) (b), whichever is later, the insured is an unexcused late filer.

645.64(3)(a)(a) The liquidator shall make recommendations to the court under s. 645.71 for the allowance of an insured's claim under sub. (2) after consideration of the probable outcome of any pending action against the insured on which the claim is based, the probable damages recoverable in the action and the probable costs and expenses of defense. After allowance by the court, the liquidator shall withhold any dividends payable on the claim, pending the outcome of litigation and negotiation with the insured. Whenever it seems appropriate, the liquidator shall reconsider the claim on the basis of additional information and amend the recommendations to the court. The insured shall be afforded the same notice and opportunity to be heard on all changes in the recommendation as in its initial determination. The court may amend its allowance as it thinks appropriate.

645.64(3)(b)(b) As claims against the insured are settled or barred, the insured shall be paid from the amount withheld the same percentage dividend as was paid on other claims of like priority, based on the lesser of the following:

645.64(3)(b)1.1. The amount actually recovered from the insured by action or paid by agreement plus the reasonable costs and expenses of defense.

645.64(3)(c)(c) After all claims are settled or barred, any sum remaining from the amount withheld shall revert to the undistributed assets of the insurer. Delay in final payment under this subsection shall not be a reason for unreasonable delay of final distribution and discharge of the liquidator.

645.64(4)(4)Multiple claims. If several claims founded upon one policy are filed, whether by 3rd parties or as claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy is applicable exceeds that limit, each claim as allowed shall be reduced in the same proportion so that the total equals the policy limit. Claims by the insured shall be evaluated as in sub. (3). If any insured's claim is subsequently reduced under sub. (3), the amount thus freed shall be apportioned ratably among the claims that have been reduced under this subsection.

645.65(1)(1)Notice of rejection and request for hearing. When a claim is denied in whole or in part by the liquidator, written notice of the determination and of the right to object shall be given promptly to the claimant and the claimant's attorney by first class mail at the address shown in the proof of claim. Within 60 days from the mailing of the notice, the claimant may file objections with the court. If objections are not filed within that period, the claimant may not further object to the determination.

645.65(2)(2)Notice of hearing. Whenever objections are filed with the court, the liquidator shall ask the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or the claimant's attorney and to any other persons directly affected, not less than 10 nor more than 20 days before the date of the hearing. The matter may be heard by the court or by a court-appointed referee.

645.66645.66
Claims of surety. Whenever a creditor whose claim against an insurer is secured in whole or in part by the undertaking of another person fails to prove and file that claim, the other person may do so in the creditor's name, and is subrogated to the rights of the creditor, whether the claim has been filed by the creditor or by the other person in the creditor's name, to the extent that the other person discharges the undertaking. In the absence of an agreement with the creditor to the contrary, the other person shall not be entitled to any dividend until the amount paid to the creditor on the undertaking plus the dividends paid on the claim from the insurer's estate to the creditor equals the amount of the entire claim of the creditor. Any excess received by the creditor shall be held in trust for such other person.

645.67(1)(1) The value of any security held by a secured creditor shall be determined in one of the following ways, as the court directs:

645.67(1)(a)(a) By converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditor;

645.67(1)(b)(b) By agreement, arbitration, compromise or litigation between the creditor and the liquidator.

645.67(2)(2) The determination shall be under the supervision and control of the court. The amount so determined shall be credited upon the secured claim, and any deficiency shall be treated as an unsecured claim. If the claimant surrenders his or her security to the liquidator, the entire claim shall be allowed as if unsecured.

645.68645.68
Order of distribution. The order of distribution of claims from the insurer's estate shall be as stated in this section. The first $50 of the amount allowed on each claim in the classes under subs. (3) to (6), except for claims of the federal government under subs. (3) and (3c), shall be deducted from the claim and included in the class under sub. (8). Claims may not be cumulated by assignment to avoid application of the $50 deductible provision. Subject to the $50 deductible provision, every claim in each class shall be paid in full or adequate funds retained for the payment before the members of the next class receive any payment. No subclasses shall be established within any class. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable by the claimant shall not be included in the classes under subs. (3) and (3m), other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment made by an employer to an employee shall be treated as a gratuity. The claims described in s. 645.69 are among the claims not subject to subs. (3) and (3m).

645.68(1)(1)Administration costs. The costs and expenses of administration, including but not limited to the following: the actual and necessary costs of preserving or recovering the assets of the insurer; compensation for all services rendered in the liquidation; any necessary filing fees; the fees and mileage payable to witnesses; and reasonable attorney fees.

645.68(3)(3)Loss claims. All claims under policies for losses incurred, including 3rd-party claims and federal, state, and local government claims, except the first $200 of losses otherwise payable to any claimant under this subsection other than the federal government. All claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims. Claims may not be cumulated by assignment to avoid application of the $200 deductible provision.

645.68(3c)(3c)Federal government claims and interest. Claims of the federal government not included under sub. (3), and interest at the legal rate compounded annually on all claims in the class under this subsection, and on all claims of the federal government in the class under sub. (3), from the date of the petition for liquidation or the date on which the claim becomes due, whichever is later, until the date on which the dividend is declared.

645.68(3m)(3m)Certain injury claims. Claims against the insurer that are not under policies and that are for liability for bodily injury or for injury to or destruction of tangible property.

645.68(3r)(a)(a) Debts due to employees for services performed, not to exceed $1,000 to each employee which have been earned within one year before the filing of the petition for liquidation. Officers shall not be entitled to the benefit of this priority.

645.68(3r)(b)(b) Such priority shall be in lieu of any other similar priority authorized by law as to wages or compensation of employees.

645.68(3r)(c)(c) Notwithstanding pars. (a) and (b) and subs. (3), (3c) and (3m), if there are no claims of the federal government, the claims in the class under this subsection shall have priority over all claims in the classes under subs. (3) to (11).

645.68(4)(4)Unearned premiums and small loss claims. Claims under nonassessable policies for unearned premiums or other premium refunds and the first $200 of loss excepted by the deductible provision in sub. (3).

645.68(5)(5)Residual classification. All other claims, including claims of any state or local government, not falling within other classes under this section and claims described in s. 645.69. Claims, including those of any state or local governmental body, for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under sub. (8).

645.68(6)(6)Judgments. Claims based solely on judgments. If a claimant files a claim and bases it both on the judgment and on the underlying facts, the claim shall be considered by the liquidator who shall give the judgment such weight as he or she deems appropriate. The claim as allowed shall receive the priority it would receive in the absence of the judgment. If the judgment is larger than the allowance on the underlying claim, the remaining portion of the judgment shall be treated as if it were a claim based solely on a judgment.

645.68(7)(7)Interest on claims already paid. Interest at the legal rate compounded annually on all claims in the classes under subs. (1) to (6), except for claims of the federal government in the classes under subs. (3) and (3c), from the date of the petition for liquidation or the date on which the claim becomes due, whichever is later, until the date on which the dividend is declared. The liquidator, with the approval of the court, may make reasonable classifications of claims for purposes of computing interest, may make approximate computations and may ignore certain classifications and time periods that are trifling.

645.68(8)(8)Miscellaneous subordinated claims. The remaining claims or portions of claims not already paid, with interest as in sub. (7):

645.68(8)(a)(a) Except for claims of the federal government under subs. (3) and (3c), the first $50 of each claim in the classes under subs. (3) to (6) subordinated under this section.

645.68 Annotation
The priority system set forth in this section provides inflexible and cumbersome rules concerning the order of distribution of claims, and therefore, requiring its application to insurer rehabilitation would be contrary to the stated purpose of rehabilitation proceedings. Applying well-established principles of statutory construction, this section cannot be reasonably interpreted to apply to insurer rehabilitation proceedings. Nickel v. Wells Fargo Bank, 2013 WI App 129, 351 Wis. 2d 539, 841 N.W.2d 482, 10-2022.

645.69645.69
Claims for certain health care costs. Unless a lower class is applicable, a claim is included among the claims that are subject to the classification under s. 645.68 (5) if the claim is any of the following:

645.69(1)(1) A claim against a health maintenance organization insurer or an insurer described in s. 609.91 (1m) or (1p) for health care costs, as defined in s. 609.01 (1j), for which an enrollee, as defined in s. 609.01 (1d), policyholder or insured of the health maintenance organization insurer or other insurer is not liable under ss. 609.91 to 609.935.

645.69(2)(2) A claim for health care costs, as defined in s. 609.01 (1j), for which an enrollee, as defined in s. 609.01 (1d), or policyholder of a health maintenance organization is not liable for any reason.

645.71(1)(1)Recommended claims. The liquidator shall review all claims duly filed in the liquidation and shall make all further investigation deemed necessary by the liquidator. The liquidator may compound, compromise or in any other manner negotiate the amount for which claims will be recommended to the court. Unresolved disputes shall be determined under s. 645.65. As often as practicable, the liquidator shall present to the court reports of claims against the insurer with his or her recommendations. The liquidator shall notify claimants of the liquidator's recommendations. The reports shall include the name and address of each claimant, the particulars of the claim and the amount of the claim finally recommended, if any. As soon as reasonably possible after the last day for filing claims, the liquidator shall present a list of all claims not already reported. If the insurer has issued annuities or life insurance policies, the liquidator shall report the persons to whom, according to the records of the insurer, amounts are owed as cash surrender values or other investment values and the amounts owed. If the insurer has issued policies on the advance premium plan, the liquidator shall report the persons to whom, according to the records of the insurer, unearned premiums are owed and the amounts owed.

645.71(2)(2)Allowance of claims. The court may approve, disapprove or modify any report on claims by the liquidator, except that the liquidator's agreements with other parties shall be final and binding on the court on claims of any size settled for $500 or less. No claim under a policy of insurance may be allowed for an amount in excess of the applicable policy limits.

645.72(1)(1)Payments to creditors. Subject to ch. 646 and under the direction of the court, the liquidator shall pay dividends as promptly as possible to security funds under sub. (2) and to other creditors in a manner that will assure the proper recognition of priorities and a reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims, including 3rd-party claims. Distribution of assets in kind may be made at valuations set by agreement between the liquidator and the creditor and approved by the court.

645.72(2)(2)Payment of dividends to security funds. The liquidator shall pay dividends to security funds under sub. (1) to satisfy their subrogation claims under s. 646.33 or similar laws of other states, if the claims have been filed pursuant to rules established under s. 645.61 (4). The total dividends to security funds paid under this subsection may not exceed the total of the claims properly made by the funds under s. 645.61 (4). The liquidator shall pay dividends as frequently as practicable and in sums as large as possible without sacrificing of asset values by untimely disposition or inequitable allocation of available assets among the subrogated funds. The liquidator may protect against inequitable allocations by making payments to funds subject to binding agreements by the funds to repay any portions of the dividends found later to be in excess of an equitable allocation. If assets are available, the liquidator may also lend to security funds, subject to court approval.

645.72(3)(3)Reports to the court. The liquidator shall report to the court within 120 days after the issuance of the liquidation order under s. 645.42, and every 3 months thereafter, on the status of the assets and the payment of dividends and loans under sub. (2). The court may order the liquidator to pay dividends to security funds under sub. (2) more expeditiously to minimize the need for assessments under s. 646.51.

645.72(4)(a)(a) Upon liquidation of a domestic mutual insurance company, any assets held in excess of its liabilities and the amounts which may be paid to its members as provided under sub. (4) (b) shall be paid into the state treasury to the credit of the common school fund.

645.72(4)(b)(b) The maximum amount payable upon liquidation to any member for and on account of his or her membership in a domestic mutual insurance company, in addition to the insurance benefits promised in the policy, shall be the total of all premium payments made by the member with interest at the legal rate compounded annually.

645.73(1)(1)Unclaimed funds. The liquidator, as provided in ch. 177, shall report and deliver to the secretary of revenue all unclaimed funds subject to distribution remaining in the liquidator's hands when he or she is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member or other person who is unknown or cannot be found or who is under disability with no person legally competent to receive a distributive share.

645.73(2)(2)Withheld funds. All funds withheld under s. 645.64 and not distributed shall upon discharge of the liquidator be deposited with the secretary of revenue and paid by the secretary in accordance with s. 645.64. Any sums remaining which under s. 645.64 would revert to the undistributed assets of the insurer shall be transferred to the secretary of revenue and become the property of the state under sub. (1), unless the commissioner petitions the court to reopen the liquidation under s. 645.75.

2013-14 Wisconsin Statutes updated through 2015 Wis. Act 54 and all Supreme Court Orders entered before July 7, 2015. Published and certified under s. 35.18. Changes effective after July 7, 2015 are designated by NOTES. (Published 7-7-15)